Calgary got its first glimpse of potential property tax implications of COVID-19 and the ongoing lag in the economy.
In Tuesday’s Priorities and Finance committee, councillors heard that early estimates show there would be a drop in both the residential and non-residential tax rolls for 2021.
Most sub-categories in each area declined in value in comparison with 2020.
According to the City of Calgary’s manager of assessments, Eddie Lee, the residential taxable assessment roll is expected to drop 2.6 per cent, from $210 billion to $204.9 billion. Non-residential is estimated to drop from $59.7 billion to $57.1 billion.
Lee said that doesn’t mean taxes are going to go down.
“The revenue neutral ensures that those properties that are hardest hit by the pandemic or the market conditions will see the tax responsibility distributed from them,” he explained.
“Those that are least impacted by the pandemic or the market conditions will see tax responsibility redistributed to them.”
What this all means is that properties that gained (or had a lower than market decline) will see an additional property tax burden on them.
In some cases, particularly on the industrial side, that could be significant should projections bear out.
Councillors concerned about different kind of tax shift
Over the past two-plus years, Calgary small businesses have been dealing with skyrocketing property tax increases after the downtown skyrise tower property values plummeted.
That pushed the tax burden onto smaller Calgary businesses.
Based on these projections that’s going to happen again. Only it will hit different property categories.
2021 Illustrative property … by Darren Krause
This information indicates a potential large tax increase for multi-residential high-rise apartment buildings. The other areas will see a substantial decrease in value. Similarly, neighbourhood retail and warehouses will bear the tax shift, with strip mall and 17 Avenue SW retail seeing sharp declines in value.
Coun. Ward Sutherland said the revenue neutral system forces these imbalances.
“It basically handcuffs us in order to make the right kind of adjustments to deal with these imbalances,” he said.
Residents often see these increases as city council’s inability to control spending. He said it has a lot to do with an inflexible taxation system.
Backwards budgeting
Coun. Jeromy Farkas called it a backwards budgeting system that will impact the kinds of businesses the city is trying to attract.
“Look at who is receiving these huge increases right now. These are major industries that we’re trying to cultivate and to attract to come to Calgary,” he said.
“And how can we tell them that if they do invest, and try to serve our diversification goals that you’re going to be first in line for 15 or 20% increase?”
Coun. Farkas said the city appears to set the amount it wants to spend for operations and then works their way back to set the mill rate for taxation.
The market assessed value system is dictated through the province’s Municipal Government Act.
Councillors have taken issue with this regime in the past. Through the course of the debate, they suggested pressure the province to allow for more flexibility.
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